Singapore LNG stakes claim for second terminal

Singapore LNG is touting its experience running Southeast Asia’s biggest LNG terminal as a sign it can manage a second facility planned for the city state. Startup is likely to come after 2020.

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BY CHOU HUI HONGBloomberg

SINGAPORE -- Singapore LNG is touting its experience running
Southeast Asias biggest LNG terminal as a sign it can
manage a second facility planned for the city state.

John Ng, CEO, says hes up for the challenge when the
government starts looking for an operator. While Singapore
hasnt said when the second terminal will start,
industry consultants including FGE forecast it will be after
2020.

We are always ready, Ng said in an interview at
his office on March 20. Do we have the capability to
build, design and operate the terminal? The answer is
yes.

As Asia overtakes Europe as the worlds biggest
natural gas importer,Singapore wants to tap burgeoning demand
for cargoes and cement its place as the regions LNG
trading hub. The country, which uses gas for more than 90
of its electricity,is studying locations on the east of
the island for a second terminal to support industries and
fuel power stations, Prime Minister Lee Hsien Loong said.

The SLNG team will probably be the operator because
they will be more experienced and the government will be
comfortable replicating the same model, said Tony
Regan,a Singapore-based energy consultant at Tri-Zen
International. He expects the terminal to start operations
after 2020.

Asia accounts for 46% of global gas trade,according to the
International Energy Agency,which identifies Singapore as
best placed to be a center for LNG trading. The region
consumed 75% of the worlds LNG last year,data from the
International Group of LNG Importers show.

Japan Demand

Singapores second terminal will have a capacity similar
to the first,according to the Energy Market Authority,the
regulator that oversees the countrys energy industry.
The existing facility has three tanks that can handle 6
million tpy. A fourth will be added by 2017, increasing
capacity to 9 million tpy.

The site can accommodate as many as seven tanks that could
process 15 million tpy, Lee said at the official opening last
month. Japan, the worlds biggest importer, consumed
about 87.5 million tons in 2013.

Sharon Tan, a spokeswoman for the EMA, said the regulator
doesnt have information yet about the process it will
use to identify and select an operator.

Singapore has the only LNG terminal in Asia that can reload
cargoes from storage, allowing traders to store gas during
low consumption periods before selling them during peak
demand seasons in winter and summer. SLNG may use the third
tank for short term trade, Ng said.

Singapore Traders

Germanys E.ON and Glencore Xstrata are among companies
that have hired LNG traders in the city as the market grows.
Qatar Liquefied Gas, the worlds largest producer, is
looking to expand in the region, Abdulla Al-Hussaini, the
companys marketing director,said in an October
interview.

More terminals in the region will help boost trade volumes
and establish more competitive and responsive LNG prices,
according to Ng. About 27% of LNG supplies,or 65 million
tons,are traded on a short term and spot basis, according to
the International Group of LNG Importers. The rest is bought
and sold in long-term supply contracts with prices typically
linked to the cost of crude oil.

LNG to be shipped over the next four to eight weeks to North
Asia dropped to $15.80/MMBtu in the week ended March 24, down
20% from a record $19.70 on Feb 3,according to New York-based
Energy Intelligence.

Floating Terminal

The Energy Market Authority is studying whether to build the
plant offshore on a floating facility, its CEO Chee Hong Tat
said Feb 26. SLNG, owned by the Singapore government,was
formed in June 2009 by the EMA to operate the $1.3 billion
first terminal on Jurong Island that began operating in March
last year.

Im quite confident we have the capability to do
the second terminal as a floating one, said Ng, who
became CEO on Dec 1,taking over from Neil McGregor. The
challenges are no less or no more than a land based
one.

A floating storage and regasification unit, (FSRU), may be a
better choice for Singapores eastern terminal as technology improves, according to
Regan. FSRUs typically consist of LNG vessels anchored
offshore to receive and store shipments before the
supercooled gas is sent into an onshore pipeline system.

FSRUs are cheap, quick to build and start,you can put
in a second unit five years later to increase capacity and it
gives Singapore,which is a small country,a lot more options
where to place the second terminal, said Regan.

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